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Weekly Roundup: Yellow Card Awarded First-Ever African Virtual Asset License in Botswana & More

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In this week’s news roundup, you will read about a new report by Chainalysis revealing how crypto payments are flourishing in Sub-Saharan Africa, the Bank of Namibia’s inclusion of virtual assets in its regulatory framework, the conversion of Namibian uranium into NFTs, and more.

Chainalysis: Crypto Retail Payments Thriving in Sub-Saharan Africa

A new report released by Chainalysis, a blockchain data firm, has revealed that cryptocurrency is quietly thriving in Sub-Saharan Africa despite the continent having the least cryptocurrency transaction volume in comparison to any other region.

The region recorded volumes of $100.6 billion in on-chain volume received between July 2021 and June 2022, which represented a global activity of 2%, but a growth of 16% compared to the previous year. Despite the low transaction volumes, the report revealed that Africa has some of the most well-developed crypto markets of any other region, with deep integration and penetration into everyday financial activity for users in Nigeria and Kenya.

Additionally, both Nigeria and Kenya rank 11th and 19th on Chainalysis’ Global Crypto Adoption Index, respectively, with both countries showing strong crypto adoption when weighted for population and purchasing power, mostly for P2P exchanges. Retail-sized transfers under $10,000 make up 6.4% of the transaction volumes, which is higher than any other region. Looking at the number of individual transfers, retail transfers in that aspect make up 95% of all the transfers, while small retail transfers below $1,000 increase the share to 80% more than any other region. According to the report, the number of small retail transfers started growing at the onset of the crypto bear market.

The Sub-Saharan region also witnessed heavy adoption of P2P exchanges, which accounted for 6% of all virtual currency transaction volumes in Africa, more than double the share of the three next-closest regions.

Bank of Namibia Adds Virtual Assets as Part of Its Fintech Innovations Regulatory Framework

The Bank of Namibia (BON) recently announced that it has included virtual assets and virtual assets services providers under its Fintech Innovations Regulatory Framework in a phased approach through its innovation hub despite the fact that cryptocurrencies are not legal tender in the country.

The bank also said it was considering making changes to applicable laws and regulations in consultation with the relevant authorities. Furthermore, the bank noted that while virtual currencies aren’t legally recognized, merchants and traders were free to accept them as a form of payment provided both parties willingly participated in such a trade or exchange.

The bank’s new position on cryptocurrencies seems to suggest that the bank is warming up to digital currencies despite prior warnings to citizens not to utilize or trade in cryptocurrencies.

Further, Johannes Gawaxab, the BON Governor who has in the past criticized cryptocurrencies, revealed that the bank is exploring and studying the feasibility of rolling out a CBDC. He, however, cautioned that the bank will not be rushed into it and added that the BON plans to release a consultation paper on CBDCs this month.

If CBDCs are explored and implemented with due care and caution, they could hold immense potential benefit for a more stable, safer, more widely available, and less expensive means of payment than private forms of digital money,” said Gawaxab.

Namibian Uranium to be Converted to NFTs

Madison Metals, a mining and exploration firm operating uranium mines in Namibia, has reached a first-of-its-kind agreement with the Lux Network of blockchains to tokenize up to 20 million pounds of uranium in the next five years.

Madison will deliver 20 million pounds of U308 uranium oxide from its project in Namibia to the Lux Network as soon as it commences commercial production. However, interested individuals will be able to mint uranium non-fungible tokens on the Lux Market as of October 15, 2022. While the mining will only occur exclusively on LUX Network, the NFTs will be available on every major blockchain with the fulfillment of the delivery backing the first-ever uranium-backed NFTs.

The token sale is expected to generate revenue for corporate use.

Luno Appoints Johan Hetzel as Head of Compliance for Africa

Crypto investment app, Luno, has announced the appointment of Johan Hetzel as Head of Compliance for Africa.

Hetzel’s immediate focus will be to continue building on Luno’s high compliance standards as one of the world’s most regulated digital asset service providers. With operations in Nigeria, South Africa, and Uganda, Hetzel will also participate in the development of regulatory frameworks and the associated licensing applications in both Nigeria and South Africa.

The incumbent’s past experience has largely been in compliance at various banks in South Africa, with the most recent being at Mama Money, where he serves as the Head of Compliance for the fintech’s global operations.

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US Treasury Sanctions Hit Russian Arms Dealer’s Crypto Wallets

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The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has imposed full blocking sanctions on 22 individuals and entities across several countries, including Russia and Cyprus, as part of its sanctions evasion network that supports Russia’s military-industrial complex.

The sanctions were imposed under Executive Order 14024 and are part of the U.S.’s strategy to target sanctions evasion globally, close key channels, and limit Russia’s access to revenue for its war in Ukraine.

US Treasury Goes After Russian Arms Dealer’s Cryptos

The U.S. Treasury’s sanctions were imposed by the Russian Elites, Proxies, and Oligarchs (REPO) Task Force, a multilateral effort to identify, freeze, and seize assets of sanctioned Russians worldwide. This task force leverages information from international REPO partners and key data from Treasury’s Financial Crimes Enforcement Network (FinCEN) to share information, track Russian assets, and sever Russian proxies from the international financial system.

The REPO Task Force aims to maximize the impact of multilateral sanctions while preventing opportunities for Russia to evade or circumvent U.S. and partner sanctions.

The primary target of the sanctions is a Russian sanctions evasion network led by Russia and Cyprus-based arms dealer Igor Zimenkov and his son Jonatan Zimenkov. The Zimenkov network has been involved in projects related to Russia’s defense capabilities, including supplying a Russian company with high-tech devices after Russia’s full-scale invasion of Ukraine. They have also supported sanctioned state-owned Russian defense entities, Rosoboroneksport OAO and State Corporation Rostec, which are critical components of Russia’s military-industrial complex.

Igor and Jonatan Zimenkov have worked closely together to enable Russian defense sales to third-party governments and have engaged directly with Rosoboroneksport’s potential clients to facilitate sales of Russian defense material. Igor Zimenkov has also supported the Belarusian military-industrial complex by enabling the sales efforts of State Owned Foreign Trade Unitary Enterprise Belspetsvneshtechnika in Latin America.

Today, Igor Zimenkov was designated for operating in the defense and related materiel sector of the Russian Federation economy, while Jonatan Zimenkov was designated for having materially assisted, sponsored, or provided financial, material, or technological support for Igor Zimenkov, Rosoboroneksport, and other sanctioned entities.

The Zimenkov network used front companies to funnel money and maintain a lawful appearance. Singapore-based Zimenkov network shell company Asia Trading & Construction PTE Limited and its director, Serena Bee Lin Ng, have sold helicopters to clients in Africa on behalf of the Zimenkov network. Additionally, Cyprus-based Zimenkov network shell company Lobster Management Limited and its director, Mikhail Petrov, have facilitated sanctions evasion by providing support to sanctioned entities.

The Treasury’s OFAC continues to work with its international partners to coordinate information sharing and enforcement and to travel the world in pursuit of sanctions evasion. The sanctions imposed today are a clear signal to Russia and its military-industrial complex that the U.S. and its partners are committed to tightening sanctions enforcement and preventing the evasion of international sanctions.

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BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.



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Digital Wallet Growth Will Enable More Closed-Loop Transactions

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Crypto and fintech investment firm Ark Invest has made bold predictions about digital wallets, estimating that more than half the world will soon be using at least one.

In its Jan. 31 ‘Big Ideas 2023’ research report, Ark Invest revealed that digital wallet global population penetration is currently 40%. This equates to around 3.2 billion users, the firm added.

However, the research suggests that the number of online wallet users will increase at an annual rate of 8%. The firm predicted that this will result in a global population penetration of 65% by 2030:

“Having onboarded billions of consumers and millions of merchants, digital wallets could transform the economics associated with traditional payment transactions, saving them nearly $50 billion in costs.”

It also noted that digital wallets were gaining market share in online and offline transactions. Cash is definitely in decline, accelerated by government initiatives to go digital, as recently seen in Nigeria.


Payment method trends - Ark Invest
Payment method trends – Ark Invest

Digital Wallet Growth to Continue

Ark reported that digital wallets were scaling faster than accounts at traditional financial institutions. Furthermore, U.S. digital wallet adoption rebounded in 2022, surpassing previous highs following a COVID-induced dip.

The firm estimates that U.S. digital wallet users will increase by 7% annually during the next eight years. This will be a growth of around 160 million in 2022 to more than 260 million by the end of the decade.

Digital wallet user growth - Ark Invest
Digital wallet user growth – Ark Invest

Furthermore, online wallets are enabling “closed-loop” ecosystems. This is where consumers and merchants can transact directly, cutting out the middleman. 

“Digital wallets are onboarding millions of merchants to platforms that enable direct consumer-merchant transactions that disintermediate traditional financial institutions,” it noted.

In this closed-loop environment, wallet providers capture more value per transaction, enabling savings to be shared with merchants and consumers.

Open and Closed Lopp transactions - Ark Invest
Open and Closed Lopp transactions – Ark Invest

Additionally, Ark noted that closed-loop transactions could boost the margin structure of wallet providers.

It used Block Inc. (formerly Square) as an example, stating that it paid around 60% of customer transaction fees to third parties in 2022. The fees were paid for interchange, assessment, processing, and bank settlement fees. Block’s net take rate could more than double if customers transacted directly with merchants.

Block Inc. fee structure - Ark Invest
Block Inc. fee structure – Ark Invest

Closed Loop Transactions Could Top 50%

Finally, Ark predicted that these closed-loop transactions could account for over 50% of digital payments by 2030.

It used China as an example where wallets and merchants are largely internal or domestic only.

Closed loop cost savings - Ark Invest
Closed loop cost savings – Ark Invest

In conclusion, digital wallet growth is set to continue. Cutting out the intermediary which they facilitate is beneficial to both the consumer and merchant.

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Strike Launches Lightning Remittances in the Philippines

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Bitcoin fintech giant Strike rolled out its Lightning Network money transfer service Send Globally in the Philippines, a $35 billion remittance market.

Send Globally launched in the Southeast Asian country on Jan. 31, 2023, enabling businesses and tourists to receive international money transfers in the Philippine peso. The country receives $35 billion in remittances globally.

How Strike’s Send Globally Service Works

“Remittances are a broken system and Strike delivers an incredibly empowering experience for people to send money around the world in nearly an instant,” Strike CEO Jack Mallers said.

According to a press release, Strike’s remittance service converts a sender’s fiat into Bitcoin and sends the Bitcoin to a Strike partner in the destination country using the Lightning Network, which in the case of the Philippines, is Pouch.ph. Pouch.ph then converts the Bitcoin to the recipient’s fiat currency and credits their bank or mobile money account, with Strike shielding both parties from the tax implications of handling Bitcoin directly.

Bitcoin’s Lightning Network is a layer-two solution on the Bitcoin blockchain that allows micropayments between nodes over a payment channel. Unlike traditional payment networks, Lightning’s low fees enable almost zero-cost remittances.

Recently, Mallers announced a trial to bring Bitcoin Lightning Network payments to retailers through a partnership with Fiserv’s point-of-sale solution Clover Commerce. The trial allows any application with Lightning capability to pay Bitcoin for goods and services at Clover merchants.

Philippine Smartphone and Internet Adoption Auger Well for Strike

Send Globally rolled out to Strike users in Ghana, Nigeria, and Kenya on Dec. 6, 2022, where it has reportedly gained rapid traction.

However, mainstream adoption in the Philippines will depend heavily on network effects, driven by smartphone and internet penetration.

According to Statista, the number of smartphone users will increase from 85 million in 2022 to 87 million by 2023. Additionally, forecasts suggest smartphone users will increase to 91.5 million in 2025, representing roughly 83% of the island nation’s population.

Smartphone Adoption in the Philippines
Smartphone Adoption in the Philippines | Source: Statista

Additionally, Statista predicts that about three-quarters of the population will have internet access by the end of 2023. Growing internet access increases the chance of Strike’s success, since it helped drive adoption of crypto game Axie Infinity.

For Be[In]Crypto’s latest Bitcoin (BTC) analysis, click here.

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BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.



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